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Financial Planning with Mortgage Term Life Insurance

Mortgage Term Life Insurance for Your Financial Plan

When you create a financial plan, you must think about all the angles. You need to consider emergency savings, debt repayment, retirement savings, living expenses, and insurance.

But it's not just the property in your life you must insure, it's also the people. Mortgage term life insurance is a means to securing the financial future of your loved ones in the event that you are no longer there to help them achieve it.

With mortgage term life insurance, you have a system in place to help your loved ones pay off the debts that you've created even if they lose your income as a result of death. This policy ensures that they get the death benefit—which can be level or decreasing in order to correspond to your decreasing mortgage balance.

Financial planning isn’t easy. It’s detail-oriented work that requires you to focus on what is, what you hope will be, and what may end up happening. You have to examine every angle and mortgage term life insurance helps make that easier.

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Choosing which Mortgage Term Life Policy to Add to Your Financial Plan

When you choose a mortgage term insurance policy for your financial plan, you have many choices in front of you. Two of the most popular for mortgage term life include a policy with a level premium and a level death benefit or one with a level premium and decreasing death benefit.

The level premium and level benefit policy is pretty easy to understand. You pay a consistent premium throughout the life of the policy and, no matter when you die—as long as it's during the policy term—you receive the same death benefit as you were originally issued.

A decreasing term policy is one that has you pay a level premium throughout the term of the policy but pays out a death benefit that decreases according to a set schedule. The decreasing mortgage term insurance policy is a good idea for those who anticipate their overall debt or mortgage to decrease during the term of the policy. And the premiums, while level, will collectively be less expensive in a decreasing term situation.

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Mortgage Term Life vs. What If

When you first buy your home, you have every intention of being around to watch your children grow up in it, paying it off, and eventually hosting holidays with your kids and grandkids within its walls. But unexpected events happen all the time and some of them can work against your ability to actually see these dreams become reality.

Mortgage term life is one of those vital insurance products that helps you plan for all the “what ifs” in your financial life. While it may not protect you from missing out on those things that are important to you, it can ensure that your loved ones are able to keep the home that you have all these intentions and plans for, even in the face of your death.

It’s not often that a family can go from two incomes to one, so the death of a salary earner can throw a family further into debt and force them to sell the home they love and relocate to a place they can better afford. Mortgage term life ensure that this what if doesn’t become a reality.

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Mortgage Term Life Insurance for a Stay-At-Home Spouse

Often, when we think about financial planning, we consider only the contributions of the working spouse in our plans. In a single-income family, the wage earning spouse is the focus of our financial plan while the money-saving contributions of the stay-at-home spouse aren’t considered. But what if the stay-at-home spouse were to pass on, and the working spouse needed to hire someone to supplement all the contributions that spouse made to the home each day?

Mortgage term life insurance is the perfect way to supplement the loss of a spouse who contributes so significantly to the running of the home. With mortgage term life insurance, the wage earning spouse can afford to hire help that can keep the home running smoothly while he or she still goes to work. In addition, it can remove some of the financial burden of debt and allow him or her some breathing space to mourn the loss of his or her spouse and help the children deal with this change.

Having a mortgage term life insurance policy on each spouse in a home is important, whether they contribute income, household organization, or a combination of the two.

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Steps to a Complete Financial Plan

Here are a few of the steps involved in creating a thorough financial plan:

  1. Identify your financial goals: In order to plan for something, you need to know what that something is. A financial plan helps you plan for your future goals, but you must identify them before you can put a plan in place. make sure you also consider the timeline for acheivement that you'd like.
  2. Look at your budget: Once you know what your goals are, you will need to tweak your current budget accordingly in order to actually achieve them. Determine how much to put aside to debt repayment and savings, based on the priorities and timelines of your goals.
  3. Prepare for the unexpected: No matter how thorough your financial plan is, unexpected things happen and you must be prepared for them. One way to get ready is to invest in insurance products like Mortgage term insurance. Mortgage term insurance can ensure that your mortgage is paid off after an unexpected death, which will help your family keep your financial plan intact.

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How to Use Mortgage Term Life Insurance in Your Financial Plan

With a name like mortgage term life insurance, you might think that this product has a restrictive use within your financial plan. In reality, it is perfectly suited to provide death benefit protection during the years that you still owe money on your home’s mortgage, the death benefit can be utilized by your heirs for many different purposes.

A mortgage term life insurance policy can have many uses in your financial plan. You can use it as your fail-safe for mortgage repayment in the event of the death of a spouse, or you can use it to help supplement college tuition savings, debt repayment, and counseling expenses after the death of a spouse or parent.

A mortgage term life insurance policy’s place in your financial plan is one of flexible protection against the financial consequences of an untimely death. For this reason, it is a vital addition to all financial plans, no matter how close you are to paying off your home.

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Cancelling a Mortgage Term Life Policy

Many homeowners pay off their homes early if they get the opportunity to do so. This is a wonderful, freeing feeling that makes a homeowner feel both pride and confidence. It also leaves many to wonder whether or not they should cancel their mortgage term life policies since they no longer carry that mortgage debt. But mortgage term life insurance policies are valuable—whether you have a mortgage or not.

First, mortgage term life insurance policies lock in a rate of premium based on your age and health at the time that you apply for your policy. And while your health might remain the same over the years, your age won’t, which means the premiums savings that you got when you initially took out the policy, are important.

Second, your beneficiaries will receive the mortgage term life death benefit even if there is no mortgage at the time of your death. Since this is the case, they can actually use the death benefit for many other purposes, all of which could help them out tremendously in the face of your death.

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Attacking Debt in Your Financial Plan

When families create their financial plan, most of them agree that knocking out debt is a priority. After all, why have your money working for someone else in the form of interest payments when you could have that money working for you?

One of the biggest debts that families have is mortgage debt. While your home is one of the most important assets you will every buy, it’s also one of the most pricey and, as a result, has the most interest outlay—even with a low interest rate.

That’s why having a mortgage term insurance policy in your financial plan is so important; the thought of leaving that much debt for one spouse to handle after the death of the other is too overwhelming and, in many cases, impossible. A mortgage term insurance policy supports the debt repayment aspect of your financial plan by providing an alternative for debt repayment after the death of a spouse. Neglecting this important step can create problems down the road that your family is not ready to deal with.

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Retirement and Mortgage Term Life Insurance

A comfortable retirement is the top priority goal of many financial plans. But planning a comfortable, financially secure retirement for two people isn’t easy. It takes focus, determination and disciplined saving. And if one of the wage earning individuals passes away before retirement, it could be impossible for the remaining spouse to continue to pay off debt and save for retirement.

A mortgage term life insurance policy can step up in the event of either spouse’s death and either make sure debt is paid off or retirement savings is supplemented. Because mortgage term life insurance policies do not need to be used to pay off a mortgage after death.

Their death benefit can be used to increase your retirement resources and can even be paid out like an annuity if you choose that option. A mortgage term life insurance allows you the peace of mind of knowing that you will be prepared for retirement no matter what happens on the road there.

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Choosing Affordable Insurance for Your Financial Plan

Finding affordable insurance is important when completing your financial plan because if you want to sustain the premiums, you must be able to afford the policy. In addition, the less money you spend on premiums, the more money you have for debt repayment and savings.

This is one of the reasons that mortgage term life insurance is such a good choice for home owners. Because mortgage term life insurance is a policy that covers you for a certain period, instead of life, it is able to be priced very affordably. All your premium dollars go toward paying the cost of the insurance and none work toward accumulating a cash value, which again is helpful in keeping your costs low.

So when working on the insurance part of your financial plan, consider the benefits and value of a mortgage term life insurance policy and how adding it to your plan helps you create not just a path to financial stability, but a successful one.

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Mortgage Term Insurance for All Income Brackets

Financial plans aren’t just a tool for the wealthy and financially stable. Financial plans are fantastic tools for those whose budgets are out of whack and people with modest incomes who need to keep tight reigns on their spending in order to achieve their future goals.

Mortgage term insurance is an important product to add to your financial arsenal no matter what income bracket you are in or what state your finances are in, because it helps provide an affordable safety net for a worst case scenario.

Worst case scenario situations, such as the death of a wage earning spouse, are terrible for everyone—but when they happen to a family that is already in dire financial straits, or one whose finances are disorganized, they can be emotionally and financially devastating.

But you can help your family avoid that financial devastation by including a mortgage term insurance policy in your financial plan and giving them the freedom to pay off debt without fear after your loss.

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Securing Net Worth with Mortgage Term Life Insurance

When you work on your financial plan, you will likely determine your net worth as part of the process. Your net worth is equal to the value of all of your assets, minus your liabilities. But net worth is a nebulous concept, especially when it comes to real estate.

For instance, if you own a home that is currently worth $100k, and you owe $80k, you can assume that you have a net worth (at least in terms of your home) of $20K. But if you pass away and your family has to sell the home quickly because they can no longer afford it, then they may not be able to find a buyer at $100k and may have to settle for less.

Mortgage term life insurance protects that net worth by not only providing a death benefit that can pay off your mortgage but can also be structured to pay the assessed value of the home, instead of just the mortgage balance.

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Mortgage Term Insurance—Protecting Your Original Assessed Value

When you buy your home, you may buy it for a price that is right around the home’s assessed value. This is a major investment that is usually intended to benefit your family for years to come.

And while you might hope for your home’s value to only increase over the years, the unfortunately truth is that it can actually decrease. Unfortunately, you can’t always control what happens to your home’s value—since the area, town, county or state that it is in could go through tax, economic and social changes that create lowered property values.

A mortgage term insurance policy that has a death benefit equal to the highest recent assessed value of your home can help you protect the value of your home for your heirs, during the term of the policy, because a mortgage term insurance policy pays out the death benefit upon death, not the newly assessed value. You can even buy a policy for more than your assessed value and add on what you hope the assessed increase will be in a few years.

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Mortgage Term Insurance for your Family's Future

If you were to pass away, you might think that your family could simply sell your home and that would enable them to financially adjust to your death. Unfortunately, it is not easy to sell a home. Often, it depends on the general economic climate as well as the location you live in and how desirable the home and neighborhood are.

When you include a mortgage term insurance policy in your financial plan, you give your family the financial security they need to wait before selling. This means they can hold off on the sale of your property until the time is right, economically. It also takes away any of the financial desperation they may have that would force them to sell even if they don’t want to.

Giving your family the ability to choose when and if to sell your family home is a valuable gift that they will appreciate and that will reduce their stress level and allow them to focus their energy on emotional recovery rather than financial survival.

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Financial Empowerment and Mortgage Life Insurance

One of the many purposes of a financial plan is to help empower you and your family both emotionally and financially. A financial plan lays the groundwork for spending and achieving goals, which helps you and your family both feel more secure and like you have a concrete plan of action and be acting in a way that secures your financial future and provides immediate results.

One important aspect of this empowerment is the addition of a mortgage life insurance policy to your plan. A mortgage life insurance policy helps your family know that they can continue on with the financially and emotionally empowering action plan you’ve put into place even after your income is lost.

Knowing that a mortgage life insurance policy is there to assist them after you pass away can give your family the freedom from worry that they need in order to grow and move on to financial success.

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Do Singles Need Mortgage Term Life Insurance?

If you don’t have a family, you might think that you have no need for a financial plan or for a mortgage term life insurance policy within that plan. But if you have a cosigner on your mortgage or a cobuyer, you should rethink that stance.

When you pass away, your cosigners and cobuyers are solely financially responsible for the debt left by your mortgage. As you work on your individual financial plan, make sure to factor in some mortgage term life insurance coverage so that you do not leave the burden of your portion of the mortgage debt in their hands.
By doing so, you get your financial house in order, which makes it easier to reach your financial goals, and you can ensure that you don’t leave the individual who assumed the risk of the mortgage with you, in their own financial bind.

It makes good financial sense and good business sense to both create a financial plan as a single individual and to buy mortgage term life insurance.

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Choosing Life Insurance for Your Financial Plan

When you choose a life insurance policy for your financial planning, you can choose between a whole life policy or a term life policy. If you are looking for a boost in life insurance protection that can pay for the balance of your mortgage on death, then a mortgage term life insurance policy makes the most sense.

Mortgage term life insurance policies fit well in most financial plans because they are much more affordable than whole life policies. Because instead of tying the insurance company to your risk of death over the remainder of your life, you only bind them to a certain term. In addition, because no cash values accrue, you are paying premiums only for the cost of insurance.

This creates an ideal situation because here you have a policy that you can afford to keep over the long term but that also offers a value that is worth its weight in gold.

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Mortgage Term Life Insurance and Financial Security

When your children are young, you want to make them as secure as possible. You pick all the best car safety equipment, safe foods, blankets, toys, and so on. That urge to keep your family secure doesn’t go away as your children age, but the form in which that security is provided does. Because instead of focusing so much on the physical items around them keeping them safe, you eventually begin to think about the safety of their financial security.

Mortgage term life insurance within a financial plan helps to keep your children secure by ensuring they will continue to have a roof over their heads, even after the loss of a wage earning parent. It can also offer security in the form of college tuition payments and emotional security by helping to supplement the cost of counseling.

As you expand your definition of security when it comes to your children, don’t forget the importance of a mortgage term life insurance policy.

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Mortgage Term Life—The Perfect Temporary Solution

Your financial plan is a dynamic plan. It is going to go through may evolutions through the years because there are many unexpected events that are going to affect your financial future--some good, and some bad. For instance, if you have created your plan but recently bought a new home, then you may find that you need to adjust your monthly budget, debt repayment numbers, and that your life insurance death benefit is a little lacking.

A mortgage term life policy offers you the perfect, affordable solution to dealing with the addition of a new home to your life because you can take the policy out for just the amount you need to pay that mortgage and pay premiums only for those years that you will have the mortgage.

Finding easy, affordable, and flexible methods of dealing with these financial changes is vital in creating a financial plan that lasts. Mortgage term life insurance is a plan that creates one of those methods and helps ensure that your family is safe—no matter what.

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Mortgage Term Insurance and a Growing Family

Every individual has his or her own financial goals for the future, and their own way of getting there. When working on a financial plan, these goals should become crystal clear to you and you may be surprised by the number of things you need to put into place in order to achieve them.

One interesting part of many people’s financial plans is to upgrade to a larger home as their family grows. But larger homes generally mean larger mortgages and more debt. This is not insurmountable if you plan properly, but it does mean that you need to accommodate the debt with higher monthly payments and an increased life insurance death benefit.

Mortgage term insurance allows you to take out an additional amount of life insurance on a temporary basis in order to supplement the financial changes that this planning goal leads to. Mortgage term insurance is also extremely affordable, making it the perfect all around fit.

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Investment Property and Mortgage Term Life Insurance

One way that many individuals like to invest their money and create an income to help them meet their financial planning goals is to invest in real estate. While some people choose a temporary ownership in property that they renovate and resell, others like the long term income benefits of owning a rental property.

But it takes money to make money, and owning a rental property likely means buying the property an taking on another mortgage. While you might plan to charge enough rent to carry the bulk of this mortgage, there is no guarantee that you will be able to keep the property rented, or that your family will be able to in the event of your death.

Mortgage term life insurance can provide a benefit to your family in the event of your death, that takes away their need to keep the property rented, since it can be used to pay off the mortgage entirely. This means that mortgage term life insurance can help reduce their financial stress after you’re gone while still allowing them to hold onto the investment property that can create a sustaining income for them in the future.

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Vacation Homes Need Mortgage Term Insurance, Too

It is the dream of many to someday own a vacation home in their favorite get away locale. If you have geared any part of your financial plan to someday achieving this goal, remember—owning another property could mean that you will then need to update your mortgage term insurance so that it can be there to possibly pay the additional mortgage that vacation home ownership often brings.

Just because the nature of your vacation home is to create a peaceful get away spot, that doesn’t mean that it won’t be problematic for your family to keep paying for it after your death and the subsequent loss of your income. Often, since vacations are the source of many a person’s fondest memories, the loss of a vacation home can be devastating. By ensuring that you have a mortgage term insurance policy that pays off the mortgage balance after death, you ensure that your family can continue to go to this important retreat where so many precious memories were made.

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